The short-term nature of a Silicon Valley boom

California: Seen from the peak of one of Silicon Valley’s intermittent booms, the view ahead always looks clear and unobstructed. Things that would sound decidedly flaky at any other time suddenly appear almost within reach.

The rest of the world, used to taking the tech hype with a pinch of salt, starts to capitulate. It becomes tempting to believe that maybe there’s something to the crazy-sounding promises of robots, virtual reality and driverless cars after all.

This is reminiscent of Silicon Valley 15 years ago. Back then, with dotcom mania raging, all the talk was of a New Economy. The normal laws of economics were deemed to have been suspended. The internet was going to bring a productivity miracle and massive, effortless wealth that would come without the normal economic stresses, such as inflation.

It seems almost laughable now. Only about 5 per cent of the world’s population was online at the peak of the internet bubble; people were using painfully slow connections to do things such as send email on AOL and steal music on Napster. The static pages of Web 1.0 offered little chance for the mass of humanity to talk back or become active participants of what was once called cyber space — no blogs, social networking or tweets, let alone Wikipedia or YouTube.

A decade and a half on, the dotcom dreams are back, only in a new guise. The New Economy has given way to the App Economy. All the talk, once again, is of “digital disruption”.

The dreamers and opportunists have flocked back to the San Francisco Bay Area in the hopes of striking it rich — or at least of feeling that they’re at the centre of the action and have managed to crash a really good party. The rest of the world, once again, is peering in, searching for clues about how the digital future will unfold.

There is more to it than there was at the end of the 1990s. Now, an estimated 40 per cent of humanity is online in one way or another. Broadband has replaced the shriek and buzz of dial-up modems, and smartphones have made the internet a persistent, personal companion.

While most of the dreamers and opportunists will fail, for those who make it, the rewards are likely to be astonishingly big. But the view ahead from Silicon Valley’s latest peak reveals more than just shinier smartphones and another disruptive taxi app. Further out, the driverless cars and robots are lurking, along with private space trips to Mars and super-intelligent computers.

These tech visions sound like a 1960s sci-fi fantasy. They promise homes full of intelligent gadgets whose only purpose is to serve you. New foodstuffs that have been engineered to make you healthier and save the environment. Robots that replace work with full-time leisure. Magical new forms of transportation.

The people backing ideas such as these claim that, by and large, they are not dependent on significant scientific breakthroughs. All it takes is the onward momentum of progress in today’s digital technologies, plenty of cash and sufficient vision and ambition.

Yet forecasts about future technology adoption are frequently wrong. They are distorted by the hopes of the people who stand to benefit from the technology, or by the greed of those who think they will get rich.

They fail to take account of the resistance to new ideas, either from individuals who are wedded to an old way of doing things or vested interests who try to hamper them.

This makes it hard to tell how far away those futuristic tech visions really are. Seen from the vantage point of the latest tech boom, they seem to be hurtling closer at an unstoppable rate.

Already, driverless cars have shown themselves more effective than human chauffeurs; private rockets have escaped the bonds of Earth. As long as this boom doesn’t soon turn to bust, the plentiful supply of wealth and ambition coursing through the tech industry will continue to be there to keep the breakthroughs coming.

Referring to one of the hottest new technologies of the moment, artificial intelligence, Google co-founder Larry Page sums it up: “You always overestimate in the short term and underestimate in the long term. These technologies are very much like that.”

In Silicon Valley, there is a palpable sense of short-term hopes once again getting ahead of themselves. But the long term will get here soon enough. And when it does, the world could be a very different place.

— Financial Times